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Business owners make decisions about their business every day, some big and some small. The majority of these decisions would not warrant consulting with their accountant over. However, there are certain decisions in which involving your accountant would be the most prudent thing to do. Here are three of them:
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When CPA firms contract with a client to produce their financial statements, the agreement with the client will include the nature of the reporting level, or assurance level, that the CPA is to provide with those financial statements.
There are three different reporting levels that are generally offered by a CPA firm: Compilation, reviewed and audited. The type of reporting level desired is determined by the client, though publicly held companies are required by regulation to provide audited financial statements to their holders.
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Your accounting system is full of information. It has the pay rates of all your employees. It contains records of all your sales and all your costs. It has the data related to your investments back into the company when you purchase assets. It has all this data. How come it has such a hard time turning that data into information that you can really use, like measurements of your company’s performance in different areas?
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Separation of duties. Every good accountant knows and understands the importance of this phrase. Unfortunately, not as many business owners do. Occasionally, a business suffers the consequences that result from not having this safeguard in place. That consequence? Embezzlement.
Separation of duties, refers to dividing the responsibilities related to a businesses’ cash accounts between two or more people. In a very small company, this may just be the owner and the accountant or bookkeeper. In a larger company, it may include two or more accounting staff.
Having one person who issues checks, records deposits and reconciles the bank statements, puts too much control over the cash accounts in the hands of one person. Separating these duties among two or more individuals creates a cross-check where unusual activity is more likely to be noticed.
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